Stock market indices Sensex and Nifty took a beating falling over 1 per cent in Thursday’s trade, thus eroding all the gains that they made the previous session on the Trump trade.
Stocks fell, as concerns over weak Q2 earnings and high valuations came back to haunt investors. Also, a Trump victory means fewer Fed cuts. The FOMC will conclude its two-day policy review today.
Despite hopes that Donald Trump as the next President would cut US corporate rates and improve US spending, it is believed that volatility will only increase in his tenure.
The BSE Sensex was trading 848.48 points, or 1.06 per cent, lower at 79,529.65, with selling in private lenders such as ICICI Bank, HDFC Bank, oil-to-telecom major Reliance Industries Ltd and IT major Infosys Ltd contributing most to its fall. Nifty also fell 276 points or 1.13 per cent to 24,208.
“The ‘Trump trade’ which has sharply lifted the US markets overnight is unlikely to have a similar positive impact in India since Indian market valuations are high and there are headwinds of an earnings slowdown. Investors should stick to quality and value during this period of euphoria and uncertainty,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Nomura said tariffs and tax policy will be the focus for economic policy early in a second Trump administration. Tariffs are likely to be inflationary and negative for growth, it said.
“We now expect just one Fed cut in 2025, with policy on hold until the realised inflation shock from tariffs has passed. We expect some additional easing in 2026, but have raised our terminal rate forecast to 3.625 per cent from 3.125 per cent. The fiscal outlook will likely deteriorate under unified government,” it said.
Nuvama said the domestic stock valuations are quite elevated and the earnings momentum is weakening. A rise in bond yields or weakness in global trade would only increase volatility in markets. It noted that stock markets were quite buoyant in the first year of Trump’s tenure in 2017, but it was backed by upbeat global growth, earnings and reasonable valuations. “But tax cuts in 2018 reversed the rally with mid caps correcting 20-30 per cent. IT was the best performing sector in 2018, benefitting from increased spending by US corporates and rupee depreciation,” it noted.
PhillipCapital said Nifty has fallen by 8 per cent from its recent peak owing to massive FII outflows and concerns on growth slowdown. The brokerage remained structurally positive on Indian economy and equities and advised investors to use these dips as buying opportunity.
Incorporating the Trump win, likes banks such as ICICI Bank, Axis Bank, HDFC Bank and SBI; NBFCs such as Muthoot Finance, Shriram Finance, Bajaj Housing Finance; and IT stocks such as Infosys, LTI Mindtree and Coforge.
Among industrials, it likes L&T, Siemens, Cummins. The brokerage prefers BEL, Data patterns and HAL in the defence sector. It likes NMDC, Nalco and SAIL in metals; Ultratech, JK Cement and Ambuja Cements in the cement sector.
Among pharma names, it likes Sun Pharma, Aurobindo Pharma, Dr Reddy’s Labs. TVS Motor, Maruti Suzuki India, Bharat Forge and Hero Motocorp are PC’s preferred auto picks.
Antique Stock Broking said its September 2025 Nifty 50 target stands unchanged at 26,500. “Overall, we believe that the policies of the new US government may be positive for Indian sectors like IT services, MNC industrials, defence, textiles, oil marketing companies, city gas distribution; neutral for pharma; and negative for metals,” it said.
